You’ve heard of the smart money. Well, here’s an example of the dumb money: people who invest according to their political leanings, whether on the left or right.

Tune out the self-serving fearmongers. I’m bullish about the economy and stock market in 2021. You should be, too. Below, I explain why. I also steer you toward a timely investment opportunity.

There is no empirical evidence that a president from either party is especially better for stocks than the other. Now that there’s a new administration in Washington, the Chicken Littles are squawking again, just as they do with every regime change.

The dire warnings about our imminent future run the familiar gamut: hyperinflation, a sovereign debt crisis, an economic depression, a stock market wipeout, a real estate collapse, a U.S. dollar that’s rendered “nearly worthless”…and so on.

But these prophets of doom don’t provide much hard evidence. Instead, they regurgitate old talking points. Regrettably, as evinced by reader emails, some of you are rattled by this alarmist rhetoric.

Here’s how I answer those emails: Stay invested! Successful investors rely on data, not emotions. They create a long-term investment strategy and stick with it, calibrating as necessary but never simply dumping their stocks.

The smart money is politically agnostic. Keeping that investment principle in mind, let’s see what the latest numbers tell us.

The rally continues…

On Tuesday, the Dow Jones Industrial Average rose 30.30 points (+0.10%), the S&P 500 climbed 54.09 points (+1.42%), and the tech-heavy NASDAQ soared 464.66 points (+3.69%). In pre-market futures contracts Wednesday, all three indices were trading in the green. The post-election stock market surge still shows momentum.

The Labor Department reported Friday that U.S. non-farm payrolls jumped by 379,000 in February and the unemployment rate fell to 6.2%, beating consensus expectations for 210,000 new jobs and an unemployment rate of 6.3%. A day later, the Senate passed President Biden’s massive $1.9 trillion stimulus package. It’s all good news for the economy and by extension the stock market.

The leisure and hospitality sector led the job gains in February, adding 355,000 payrolls, with restaurants and bars comprising the bulk of that total (+286,000). As several states lifted quarantines and vaccine roll-outs accelerated, many people tentatively returned to normal life after months of isolation. Coronavirus cases are declining.

Underscoring the favorable economic news, the Organization for Economic Cooperation and Development (OECD) reported Tuesday that the U.S. economy is on track this year to grow roughly twice as fast as initially expected, due to the Biden rescue package and the emergence of effective vaccines.

In its half-year outlook, the OECD asserted that U.S. gross domestic product (GDP) would expand 6.5% in 2021, a dramatic increase from the group’s 3.2% forecast in December. The rebound of the world’s largest economy will generate sufficient momentum to help boost global GDP by 5.6% this year, versus last year’s 3.4% decline.

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The OECD projects that China will grow the fastest among all national economies, at a robust pace of 7.8%. Chinese equities finished 2020 at multi-year highs, a bull run that should continue as 2021 unfolds.

The OECD report states: “World output is expected to reach pre-pandemic levels by mid-2021, but much will depend on the race between vaccines and emerging variants of the virus.”

According to the Centers for Disease Control and Prevention, Americans are getting vaccinated at the rate of two million a day and rising. There are now more people in the U.S. fully vaccinated against COVID than people who’ve had the virus since the pandemic began, an indication that maybe, just maybe, we’ve turned the corner.

Corporate earnings growth is another positive. For the first quarter of 2021, the estimated earnings growth rate for the S&P 500 is 21.8%. If that percentage materializes as the actual growth rate for the quarter, it will mark the highest year-over-year quarterly earnings growth reported by the S&P 500 since Q3 2018 (26.1%).

As a general rule of thumb, the following portfolio allocations make sense under current conditions: 45% cash, 30% stocks, 15% hedges, and 10% bonds.

A shrewd strategic move now would be to increase your exposure to battered cyclical stocks that will benefit from economic re-opening, e.g. in the energy and financial sectors. We’re in the midst of a rotation toward value.

Also make sure your hedges sleeve contains hard assets, especially gold. The price of gold has been on a tear this year and our investment team predicts that the “yellow metal” will continue its ascent into the foreseeable future. My preferred way to profit from increases in gold prices is through small-cap miners that can put corporate operating leverage to work.

Our team has just pinpointed a gold mining stock that’s poised for exponential gains. If you act now, this tiny $9 company could hand you 20 times your money. For details on this under-the-radar gold stock, click here.

John Persinos is the editorial director of Investing Daily. You can reach him at: mailbag@investingdaily.com. To subscribe to John’s video channel, follow this link.